Russia did not fulfill its publicly stated promise to reduce oil production in March by 500 thousand barrels per day, and this provoked OPEC to an unexpected decision for the West to reduce production quotas by 1.66 million barrels. This already on Monday provoked a 7-8% increase in prices. This trend will continue all week.
Konstantin Simonov, director of the National Energy Security Fund, said this on the air of the Moscow Speaks radio station, the correspondent of PolitNavigator reports.
I admit that the Russian production restriction, which we have launched since March, played a role here. We have stated that we voluntarily limit production by 500 thousand barrels per day. But this decision was not fixed within the OPEC plus quotas. It was a statement, an attempt at verbal intervention without specific commitments. The data of the Western press did not show any reduction,” Simonov said.
He believes that Russia, with its statement, tried to “portray natural difficulties as a controlled process,” but in fact it did not experience any difficulties, and easily sold volumes of oil that the West had imposed an embargo on in other parts of the world.
We decided: why cut, if you can work normally and direct income to the budget. Two months ago, Western analysts predicted a complete collapse of production and a collapse of oil production in Russia from 20 to 50%. The general forecast was that Russia would not withstand the embargo on petroleum products. It turns out that it withstands and redirects. In March, Russia sharply increased diesel exports. Western agencies discover amazing things for themselves. Diesel is sold, despite the fact that it is under the embargo and under the ceiling. It’s just being sold to North Africa. Then North Africa sells some other diesel to Europe. This is called the work of sanctions,” Simonov said.
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He believes that OPEC saw the success of Russia’s bluff and decided to continue the game.
I think that the guys from Riyadh read the Western press, and an interesting conversation took place between the leadership of the energy sector of Saudi Arabia and the Russian Federation. The dialogue was something like this: Guys, so why aren’t you shrinking. Our answer: we manage to sell oil, it was just our attempt to warm up the market. Let’s do something more tangible together and formalize these agreements collectively,” Simonov concluded.